Bill McColl
2 min read
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Wolfspeed filed for Chapter 11 bankruptcy as it moved to restructure its debt.
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The silicone carbide semiconductor maker said its Restructuring Support Agreement with key lenders is expected to reduce its debt by about 70%.
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Wolfspeed shares have plunged on its debt woes and concerns it might not get an expected $1.75 billion in grants and tax credits from the federal CHIPS and Sciences Act of 2022.
Wolfspeed (WOLF) shares plunged 30% to an all-time low Monday as the struggling chipmaker announced it had filed for Chapter 11 bankruptcy in order to implement a Restructuring Support Agreement (RSA) with key lenders.
The company said Sunday the RSA is "expected to reduce the Company's overall debt by approximately 70%, representing a reduction of approximately $4.6 billion, and reduce the Company's annual total cash interest payments by approximately 60%." Wolfspeed said it anticipates the restructuring will make it "better positioned to execute on its long-term growth strategy and accelerate its path to profitability." Wolfspeed added that it expects to move through this process quickly, and exit bankruptcy by the end of the third quarter.
CEO Robert Feurle explained that the decision to restructure came after "evaluating potential options to strengthen our balance sheet and right-size our capital structure."
Wolfspeed had already been facing serious financial difficulties for months before outgoing executive chair Tom Warner warned in March that the firm might lose out on $750 million in grants and $1 billion in tax credits expected from the CHIPS and Science Act of 2022. That sent shares into a tailspin. They sank even further last month on a report that Wolfspeed was considering a bankruptcy filing.
Shares of Wolfspeed have lost about 90% of their value year-to-date and recently were trading at about 62 cents.
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